Bloomberg News

H.K. Weekend Secondary Home Deals Drop on New Curbs

By Kelvin Wong
March 10, 2013

Boats are moored in Aberdeen harbor in Hong Kong. Home prices have doubled in the past four years on record low mortgage rates, a lack of new supply and an influx of mainland Chinese buyers, raising concerns that housing is becoming unaffordable for the general public. Photographer: Lam Yik Fei/Bloomberg

Sales at Hong Kong’s biggest
private residential projects fell to a fewer than 10 for a
second straight weekend after the developer controlled by the
city’s richest man said it would cut prices of new units in
response to a doubling of the stamp duty.

Six existing units were sold over the past two days at the
city’s top 15 private home estates, including Tai Koo Shing and
Mei Foo Sun Chuen, compared with nine transactions a week
earlier, according to data compiled by Midland Holdings Ltd. (1200),
Hong Kong’s biggest publicly listed realtor. Cheung Kong
Holdings Ltd. (1), controlled by Li Ka-shing, will cut prices by as
much as 11 percent, it said last week.

“The market lacks any sort of upward momentum,” said
Vincent Chan, an executive director at Midland. “The impact of
the measures is obvious on the second-hand market. At the same
time, there are developers rushing to sell new apartments and
that’s taking away potential buyers as well.”

Hong Kong on Feb. 22 doubled the stamp duty tax on all
properties of more than HK$2 million ($258,000) and raised
mortgage down-payment requirements on some homes, the fourth
round of major real estate curbs since Chief Executive Leung
Chun-ying took office in July.

Home prices have doubled in the past four years on record
low mortgage rates, a lack of new supply and an influx of
mainland Chinese buyers, raising concerns that housing is
becoming unaffordable for the general public. Chief Executive
Leung has made available more land for public housing and
imposed extra tax on foreign homebuyers since July.

Cutting Prices

Cheung Kong will cut prices at the One West Kowloon project
by 11 percent and raise its overall home sales target by 10
percent for 2013, Executive Director Justin Chiu said last week.

The city’s biggest builder by value behind Sun Hung Kai
Properties Ltd. (16) targets to sell more than 5,200 units for a
record HK$30 billion this year, Chiu told reporters on March 6.

“Cheung Kong is serious about raising its market share and
we believe their products are more favorable in a down market,”
said David Ng, a Hong Kong-based analyst at Macquarie Securities
Ltd., who expects home prices to drop 10 percent in 2013.

Cheung Kong sold more than 3,300 residential units worth
HK$26 billion in 2013, both the highest among Hong Kong
developers, according to data compiled by Centaline Property
Agency Ltd., the city’s biggest closely held realtor.

Sun Hung Kai on Feb. 28 cut its target for the fiscal year
ending June by 8.6 percent to HK$32 billion. New World
Development Co., controlled by billionaire Cheng Yu-tung,
lowered its sales target in response to the government curbs.

Cheung Kong’s shares rose 1 percent to HK$120 as of 9:54
a.m. in Hong Kong today, while Sun Hung Kai was unchanged at
HK$114.90. The Hang Seng Property Index, which tracks nine of
Hong Kong’s biggest builders, has gained 17 percent in the past
year, compared with the 10 percent gain in the Hang Seng Index.

To contact the reporter on this story:
Kelvin Wong in Hong Kong at
kwong40@bloomberg.net

To contact the editor responsible for this story:
Stanley James at
sjames8@bloomberg.net